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Publication 17
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How Do I
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| 1 - | Get your records together for income and expenses. |
| 2 - | Get the forms, schedules, and publications you need. |
| 3 - | Fill in your return. |
| 4 - | Check your return to make sure it is correct. |
| 5 - | Sign and date your return. |
| 6 - | Attach all required forms and schedules. |
Substitute tax forms. You cannot use your own version of a tax form unless it meets the requirements explained in Publication 1167, Substitute Printed, Computer-Prepared, and Computer-Generated Tax Forms and Schedules.
Form W-2. If you are an employee, you should receive Form W-2 from your employer. You will need the information from this form before you prepare your return. See Form W-2 under Credit for Withholding and Estimated Tax in chapter 5.
If you do not receive Form W-2 by January 31, 2003, contact your employer. If you still do not get the form by February 15, the IRS can help you by requesting the form from your employer. When you request IRS help, be prepared to provide the following.
Form 1099. If you received certain types of income, you may receive a Form 1099. For example, if you received taxable interest of $10 or more, the payer generally must give you a Form 1099-INT. If you have not received it by January 31, 2003, contact the payer. If you still do not get the form by February 15, call the IRS for help.
You must figure your taxable income on the basis of a tax year. A tax year is an annual accounting period used for keeping records and reporting income and expenses. You must account for your income and expenses in a way that clearly shows your taxable income. The way you do this is called an accounting method. This section explains which accounting periods and methods you can use.
Most individual tax returns cover a calendar year - the 12 months from January 1 through December 31. If you do not use a calendar year, your accounting period is a fiscal year. A regular fiscal year is a 12-month period that ends on the last day of any month except December. A 52-53 week fiscal year varies from 52 to 53 weeks and always ends on the same day of the week.
You choose your accounting period (tax year) when you file your first income tax return. It cannot be longer than 12 months.
More information. For more information on accounting periods, including how to change your accounting period, see Publication 538, Accounting Periods and Methods.
Your accounting method is the way you account for your income and expenses. Most taxpayers use either the cash method or an accrual method. You choose a method when you file your first income tax return. If you want to change your accounting method after that, you generally must get IRS approval.
Cash method. If you use this method, report all items of income in the year in which you actually or constructively receive them. Deduct all expenses in the year you actually pay them. This is the method most individual taxpayers use.
Constructive receipt. You constructively receive income when it is credited to your account or set apart in any way that makes it available to you. You do not need to have physical possession of it. For example, interest credited to your bank account on December 31, 2002, is taxable income to you in 2002 if you could have withdrawn it in 2002 (even if the amount is not entered in your passbook or withdrawn until 2003).
Garnisheed wages. If your employer uses your wages to pay your debts, or if your wages are attached or garnisheed, the full amount is constructively received by you. You must include these wages in income for the year you would have received them.
Brokerage and other accounts. Profits from a brokerage account, or similar account, are fully taxable in the year you earn them. This is true even if:
Debts paid for you. If another person cancels or pays your debts (but not as a gift or loan), you have constructively received the amount and generally must include it in your gross income for the year. See Canceled Debts in chapter 13 for more information.
Payment to third party. If a third party is paid income from property you own, you have constructively received the income. It is the same as if you had actually received the income and paid it to the third party.
Payment to an agent. Income an agent receives for you is income you constructively received in the year the agent receives it. If you indicate in a contract that your income is to be paid to another person, you must include the amount in your gross income when the other person receives it.
Check received or available. A valid check you received or that was made available to you before the end of the tax year is constructively received by you in that year, even if you do not cash the check or deposit it in your account until the next year.
No constructive receipt. There may be facts to show that you did not constructively receive income.
Example. Alice Johnson, a teacher, agreed to her school board's condition that, in her absence, she would receive only the difference between her regular salary and the salary of a substitute teacher hired by the school board. Therefore, Alice did not constructively receive the amount by which her salary was reduced to pay the substitute teacher.
Accrual method. If you use an accrual method, you generally report income when you earn it, rather than when you receive it. You generally deduct your expenses when you incur them, rather than when you pay them.
Income paid in advance. Prepaid income is generally included in gross income in the year you receive it. Your method of accounting does not matter as long as the income is available to you. Prepaid income includes rents or interest you receive in advance and pay for services you will perform later.
Additional information. For more information on accounting methods, including how to change your accounting method, get Publication 538.
You must enter your social security number (SSN) in the space provided on your return. Be sure the SSN on your return is the same as the SSN on your social security card. If you are married, enter the SSNs for both you and your spouse, whether you file jointly or separately.
If you are filing a joint return, write the SSNs in the same order as the names. Please use this same order in submitting other forms and documents to the IRS.
Name change. If you changed your name because of marriage, divorce, etc., immediately notify your Social Security Administration (SSA) office so the name on your tax return is the same as the one the SSA has on its records. This may prevent delays in issuing your refund and safeguard your future social security benefits.
Dependent's social security number. You must provide the SSN of each dependent you claim, regardless of the dependent's age. This requirement applies to all dependents (not just your children) claimed on your tax return.
Exception. If your child was born and died in 2002 and you do not have an SSN for the child, you may attach a copy of the child's birth certificate instead. If you do, enter DIED in column 2 of line 6c.
No social security number. File Form SS-5 with your local SSA office to get an SSN for yourself or your dependent. It usually takes about 2 weeks to get an SSN. If you or your dependent is not eligible for an SSN, see Individual taxpayer identification number, later.
If you are a U.S. citizen, you must show proof of age, identity, and citizenship with your Form SS-5. If you are 18 or older, you must appear in person with this proof at an SSA office.
Form SS-5 is available at any SSA office. If you have any questions about which documents you can use as proof of age, identity, or citizenship, contact your SSA office.
If your dependent does not have an SSN by the time your return is due, you may want to ask for an extension of time to file, as explained earlier under When Do I Have To File.
If you do not provide a required SSN or if you provide an incorrect SSN, your tax may be increased and any refund may be reduced.
Adoption taxpayer identification number (ATIN). If you are in the process of adopting a child who is a U.S. citizen or resident and cannot get an SSN for the child until the adoption is final, you can apply for an ATIN to use instead of an SSN.
File Form W-7A with the IRS to get an ATIN if all of the following are true.
After the adoption is final, you must apply for an SSN for the child. You cannot continue using the ATIN.
See Form W-7A for more information.
Nonresident alien spouse. If your spouse is a nonresident alien and you file a joint or separate return, your spouse must have either an SSN or an ITIN. If your spouse is not eligible for an SSN, see the next discussion.
Individual taxpayer identification number (ITIN). The IRS will issue you an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN. To apply for an ITIN, file Form W-7 with the IRS. It usually takes about 4 to 6 weeks to get an ITIN. Enter this number on your tax return wherever your SSN is requested.
Alien dependent. If your dependent is a nonresident or resident alien who does not have and is not eligible to get a social security number (SSN), file Form W-7 with the IRS to apply for an ITIN. Enter this number on your return wherever the dependent's SSN is requested.
An ITIN is for
tax use only. It does not entitle you or your dependent to social security benefits or
change the employment or immigration status of either of you under U.S. law.
Penalty for not providing social security number. If you do not include your SSN or the SSN of your spouse or dependent as required, you may have to pay a penalty. See the discussion on Penalties, later, for more information.
SSN on correspondence. If you write to the IRS about your tax account, be sure to include your SSN (and the name and SSN of your spouse, if you filed a joint return) in your correspondence. Because your SSN is used to identify your account, this helps the IRS respond to your correspondence promptly.
This fund was set up to help pay for presidential election campaigns. You may have $3 of your tax liability go to this fund by checking the Yes box on Form 1040, Form 1040A, or Form 1040EZ. If you are filing a joint return, your spouse may also have $3 go to the fund. If you check Yes, it will not change the tax you pay or the refund you will receive.
The following information on entering numbers on your tax return may be useful in making the return easier to complete.
Rounding off dollars. You may round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.
If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.
Example. You receive two W-2 forms: one showing wages of $5,000.55 and one showing wages of $18,500.73. On Form 1040, line 7, you would enter $23,501 ($5,000.55 + $18,500.73 = $23,501.28), not $23,502 ($5,001 + $18,501).
Equal amounts. If you are asked to enter the smaller or larger of two equal amounts, enter that amount.
Example. Line 1 is $500. Line 3 is $500. Line 5 asks you to enter the smaller of line 1 or 3. Enter $500 on line 5.
Negative amounts. If you need to enter a negative amount, put the amount in parentheses rather than using a minus sign. To combine positive and negative amounts, add all the positive amounts together and then subtract the negative amounts.
Depending on the form you file and the items reported on your return, you may have to complete additional schedules and forms and attach them to your return.
IRS e-file
is paperless. There's nothing to sign, attach, or mail, not even your Forms W-2.
Form W-2. Form W-2, Wage and Tax Statement, is a statement from your employer of wages and other compensation paid to you and taxes withheld from your pay. You should have a Form W-2 from each employer. Be sure to attach a copy of Form W-2 in the place indicated on the front page of your return. Attach it only to the front page of your return, not to any attachments. For more information, see Form W-2 in chapter 5.
If you received a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., showing federal income tax withheld, attach a copy of that form in the place indicated on the front page of your return.
Form 1040EZ. There are no additional schedules to file with Form 1040EZ.
Form 1040A. Attach the additional schedules and forms that you had to complete behind the Form 1040A in order by number. If you are filing Schedule EIC, put it last. Do not attach items unless required to do so.
Form 1040. Attach any forms and schedules behind Form 1040 in order of the Attachment Sequence Number shown in the upper right corner of the form or schedule. Then arrange all other statements or attachments in the same order as the forms and schedules they relate to and attach them last. Do not attach items unless required to do so.
You can authorize the IRS to discuss your return with a friend, family member, or any other person you choose. If you check the Yes box in the third party designee area of your 2002 tax return and provide the information required, you are authorizing:
The authorization cannot be revoked. However, it will automatically end no later than the due date (without any extensions) for filing your 2003 tax return. This is April 15, 2004, for most people.
See your form instructions for more information.
If you want to
allow the paid preparer who signed your return to discuss it with the IRS, just enter Preparer
in the space for the designee's name.
You must sign and date your return. If you file a joint return, both you and your spouse must sign the return, even if only one of you had income.
If you file a
joint return, both spouses are generally liable for the tax, and the entire tax liability
may be assessed against either spouse. See chapter 2.
If you e-file
your return, you can use an electronic signature to sign your return. See Does My Return
Have To Be On Paper, earlier.
If you are due a refund, it cannot be issued unless you have signed your return.
Enter your occupation in the space provided in the signature section. If you file a joint return, enter both your occupation and your spouse's occupation. Entering your daytime telephone number may help speed the processing of your return.
When someone can sign for you. You can appoint an agent to sign your return if you are:
Power of attorney. A return signed by an agent in any of these cases must have a power of attorney (POA) attached that authorizes the agent to sign for you. You can use a POA that states that the agent is granted authority to sign the return, or you can use Form 2848, Power of Attorney and Declaration of Representative. Part I of Form 2848 must state that the agent is granted authority to sign the return.
Unable to sign. If the taxpayer is mentally incompetent and cannot sign the return, it must be signed by a court-appointed representative who can act for the taxpayer.
If the taxpayer is mentally competent but physically unable to sign the return or POA, a valid signature is defined under state law. It can be anything that clearly indicates the taxpayer's intent to sign. For example, the taxpayer's X with the signatures of two witnesses might be considered a valid signature under a state's law.
Spouse unable to sign. If your spouse is unable to sign for any reason, see Signing a joint return in chapter 2.
Child's return. If a child has to file a tax return but cannot sign the return, the child's parent, guardian, or another legally responsible person must sign the child's name, followed by the words By (signature), parent (or guardian) for minor child.
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